As we look to the future, we all have hopes, dreams, and goals. It’s healthy to be aspirational, and it’s smart to plan ahead. However, along the path to achieving your financial goals, you’ll probably experience a setback - and that’s totally normal, most people do. We all make mistakes, but as long as you learn from them, you’ll keep moving forward. It’s important to know what resources are at your disposal to regain strong financial health. One of the strongest and smartest tools for staying on top of your goals is your home loan, and your home loan partner.
But how can something, that is debt by definition, help your financial goals?
Here are some of the ways:
Get cash out from your home’s equity. Home equity is calculated by the difference between what you owe on your home loan versus the value of your property. If you have enough equity built up, you may be able to refinance your current loan and access some of that equity in the form of cash! Pretty helpful if you’ve got some high-interest debts to pay off, right? By consolidating those debts now, you can help rejuvenate your financial health, which will be key to hitting future goals. We know it can be a bit overwhelming, but there are some great guides to cash-out refinancing.
Lower your monthly payment with a mortgage refinance. A lower payment can help lower the odds of missing a monthly payment, something that will hurt your credit score. Also, there are Loan Modification Programs through your lender that may make your payments more affordable and help you keep your home.
Change from an adjustable rate mortgage to a fixed rate mortgage. If you have an adjustable-rate mortgage, or ARM, your monthly payments will change as the interest rate changes -- something that many experts predict happening in 2018.
Obviously, if the index to which your ARM rate is tied increases, your payments with the ARM will increase. If an increase in your monthly payment makes you squirm a bit, you may want to consider switching to a fixed rate mortgage. Your principal and interest payments won’t ever go up due to fluctuating rates.
Pro tip : If your monthly payment on a fixed rate loan includes escrow amounts for taxes and insurance, your payment each month could change over time due to changes in property taxes, insurance, or community association fees.
It has been said that dedication is the bridge between goals and accomplishment. With dedication and patience, you can reach your financial goals. If you experience a setback, don’t let it destroy all of the good that you have achieved. Instead, look for what you can learn from the setback and regain the path to achieving your goals.
Ditech is not a financial advisor and the ideas outlined above are for informational purposes only. They are not intended as investment or financial advice and should not be construed as such. Consult a financial advisor before making decisions regarding important personal financial matters, and consult a tax advisor regarding the deductibility of interest and tax implications.